4 ms·

Econometrics is one of the most discredited branches of academics that exists. These were the people who were waving their models around in the early 1990s, tr

Econometrics is one of the most discredited branches of academics that exists. These were the people who were waving their models around in the early 1990s, trying to tell people that NAFTA would have no effect on manufacturing jobs in the United States. They also promoted elimination of Glass-Steagall and the deregulation of the housing market, resulting in the subprime fraud-based economic disaster of 2008. There's a reason the neoclassical economists are hidden away in business schools, not in the actual science departments - it's because they'd have to endure the ridicule of anyone with basic training in science and math. When your models predict the opposite of what actually occurs, time and time again, well, you're supposed to recognize that there are fundamental flaws in them and go back to basics. Imagine if, in the late 1970s, all the climate researchers had predicted several decades of global cooling thanks to human activity, and had turned out to be entirely wrong, yet made no effort to re-examine their basic assumptions about how the world works. That's what neoclassical economists are doing with their econometric model nonsense.

barrenko 5y ago
Not sure why you're downvoted.
- bachmeier 5y ago
  Likely because it's a confused comment not having any relationship to the posted article, and it demonstrates lack of even a basic understanding of what econometrics is. (Source: I teach econometrics classes in a college of arts and sciences, which I share with math, statistics, physics, chemistry, and biology departments.)
- aww_dang 5y ago
  This is a politicized issue.
crimsoneer 5y ago
This is silly. Econometrics is the basis for much of what we now call data science, and good causal inference. It has bugger all to do with nafta.
huitzitziltzin 5y ago
This comment is totally uninformed and completely wrong. Econometrics is the study of making inferences about economic models from data. Making inferences from data is fundamental to everything economists have done for a long time. Econometricians are essentially applied statisticians. Indeed, I can think of many econometricians I personally know who have joint appointments in university statistics departments. Your claim that they are "hidden in business schools" is completely incorrect. Econometricians are unlikely to have made predictions about NAFTA. You provide no source for your claim that they did. Nor are they likely to have advocated against Glass-Steagall. You provide no evidence for this claim either. If you think econometricians have no training in science or math, you are also totally and completely wrong. (Again: do you think so many econometricians would have joint appointments _in statistics departments_ if that were true?) I would also invite you to visit any seminar in a prominent university economics department in the United States, not just the econometrics seminar. Outside of pure game theory, every seminar series in every department is thoroughly empirical: what is the data, how are the parameters in the model identified, etc. Or go talk to the economists who work at any of the large tech firms! Facebook, Google, and Amazon all have economics groups. Amazon's is to my knowledge the largest. They hire many econometricians every year and have consulting relationships with many of the leading academic econometricians. Would they put so much money into "one of the most discredited branches of academics that exists"? No, they would not. You don't have the slightest idea what you are talking about.
- photochemsyn 5y ago
  'Econometric models' have so many levers and dials on them that they be tuned to forecast whatever their operator wants them to forecast. Hence they mainly serve as a marketing tool to defend policies that their sponsors desire to get through Congress or the next board meeting or whatever. As far as things like model projections for NAFTA, any relatively simple search turns up dozens of references. Google Scholar isn't all that bad for this, select a custom range 1990-1994 and enter "econometric model 1992 NAFTA projections". There are dozens of results. For example: Appendix B, Macroeconomic Simulations of NAFTA https://www.cbo.gov/sites/default/files/103rd-congress-1993-1994/reports/199307budgetaryanofnafta.pdf https://www.cbo.gov/sites/default/files/103rd-congress-1993-... You can find the same for those seeking to justify the China WTO deal c.2000 but I don't recall reading much about forecasts of creating something called 'the Rust Belt' all across the once-industrial zone covering a third of the US, or the resulting job losses and economic regional malaise. Perhaps something is missing in the models?
lvl100 5y ago
I think you’re mainly focusing on macro and it’s not completely unwarranted. That said, micro stuff is fascinating to say the least, and very pertinent to data science. In fact, much of “data science” projects until 2012-13ish were handled by economists.
- SantalBlush 5y ago
  They're not just focusing on macro, they are confusing econometrics with economics. Econometrics has nothing to do with any specific economic theory; it is about statistical modelling.
  - aww_dang 5y ago
    There are theories which dispute the underlying premises of econometrics. Economics is sometimes referred to as "the dismal science". Experiments cannot be constructed in the same way as the natural sciences. Dressing economics up in the pretenses of the natural sciences has arguably led us down a path of shenanigans. Consider the Federal reserve's machinations, deliberately opaque language and absurd narratives such as "transient inflation" or "symmetric inflation". >The main characteristic or nature of human beings is that they are rational animals. They use their minds to sustain their lives and well-being. The usage of the mind, however, is not set to follow some kind of automatic procedure, but rather every individual employs his mind in accordance with his own circumstances. This makes it impossible to capture human nature by means of mathematical formulae, as is done in the natural sciences. >In short, people have the freedom of choice to change their minds and pursue actions that are contrary to what was observed in the past. As a result of the unique nature of human beings, analyses in economics can only be qualitative. >Furthermore, to pursue quantitative analysis implies the possibility of the assignment of numbers, which can be subjected to all of the operations of arithmetic. To accomplish this, it is necessary to define an objective fixed unit. Such an objective unit, however, doesn’t exist in the realm of human valuations. On this Mises wrote, "There are, in the field of economics, no constant relations, and consequently no measurement is possible."
hwers 5y ago
This is probably true but it's quite an angry response to the linked article which is mostly just a joke.
chermi 5y ago
I suspect you may have a point hidden within here, a point that I might even agree with... But it's hard to understand that point and believe that you are discussing in good faith when you conflate things that you must know not to, given your implied knowledge. Econometrics (methodology) and neoclassical (school of thought) are on different "axes" if you will, if you were to try to decompose economics into into orthogonal components. I know that's a simplification Could you perhaps critique econometrics on its own? Edit 1 because I can't type Edit 2 to add this comment -- aww_dangs comment like 2 below here and 2 deeper is the closest to the critique this guy wanted to give
imtringued 5y ago
The problem with economics is that people make the assumption that money is primarily or even exclusively a medium of exchange. It's only since Keynes that everyone understood that it's not really true. However, if you were to tax cash with a 6% annual tax then the old classical period of economics would be quite relevant again.

barrenko 5y ago

Not sure why you're downvoted.

bachmeier 5y ago
Likely because it's a confused comment not having any relationship to the posted article, and it demonstrates lack of even a basic understanding of what econometrics is. (Source: I teach econometrics classes in a college of arts and sciences, which I share with math, statistics, physics, chemistry, and biology departments.)
aww_dang 5y ago
This is a politicized issue.

crimsoneer 5y ago

This is silly. Econometrics is the basis for much of what we now call data science, and good causal inference. It has bugger all to do with nafta.

huitzitziltzin 5y ago

This comment is totally uninformed and completely wrong. Econometrics is the study of making inferences about economic models from data. Making inferences from data is fundamental to everything economists have done for a long time. Econometricians are essentially applied statisticians. Indeed, I can think of many econometricians I personally know who have joint appointments in university statistics departments. Your claim that they are "hidden in business schools" is completely incorrect. Econometricians are unlikely to have made predictions about NAFTA. You provide no source for your claim that they did. Nor are they likely to have advocated against Glass-Steagall. You provide no evidence for this claim either. If you think econometricians have no training in science or math, you are also totally and completely wrong. (Again: do you think so many econometricians would have joint appointments _in statistics departments_ if that were true?) I would also invite you to visit any seminar in a prominent university economics department in the United States, not just the econometrics seminar. Outside of pure game theory, every seminar series in every department is thoroughly empirical: what is the data, how are the parameters in the model identified, etc. Or go talk to the economists who work at any of the large tech firms! Facebook, Google, and Amazon all have economics groups. Amazon's is to my knowledge the largest. They hire many econometricians every year and have consulting relationships with many of the leading academic econometricians. Would they put so much money into "one of the most discredited branches of academics that exists"? No, they would not. You don't have the slightest idea what you are talking about.

photochemsyn 5y ago
'Econometric models' have so many levers and dials on them that they be tuned to forecast whatever their operator wants them to forecast. Hence they mainly serve as a marketing tool to defend policies that their sponsors desire to get through Congress or the next board meeting or whatever. As far as things like model projections for NAFTA, any relatively simple search turns up dozens of references. Google Scholar isn't all that bad for this, select a custom range 1990-1994 and enter "econometric model 1992 NAFTA projections". There are dozens of results. For example: Appendix B, Macroeconomic Simulations of NAFTA https://www.cbo.gov/sites/default/files/103rd-congress-1993-1994/reports/199307budgetaryanofnafta.pdf https://www.cbo.gov/sites/default/files/103rd-congress-1993-... You can find the same for those seeking to justify the China WTO deal c.2000 but I don't recall reading much about forecasts of creating something called 'the Rust Belt' all across the once-industrial zone covering a third of the US, or the resulting job losses and economic regional malaise. Perhaps something is missing in the models?

lvl100 5y ago

I think you’re mainly focusing on macro and it’s not completely unwarranted. That said, micro stuff is fascinating to say the least, and very pertinent to data science. In fact, much of “data science” projects until 2012-13ish were handled by economists.

SantalBlush 5y ago
They're not just focusing on macro, they are confusing econometrics with economics. Econometrics has nothing to do with any specific economic theory; it is about statistical modelling.
- aww_dang 5y ago
  There are theories which dispute the underlying premises of econometrics. Economics is sometimes referred to as "the dismal science". Experiments cannot be constructed in the same way as the natural sciences. Dressing economics up in the pretenses of the natural sciences has arguably led us down a path of shenanigans. Consider the Federal reserve's machinations, deliberately opaque language and absurd narratives such as "transient inflation" or "symmetric inflation". >The main characteristic or nature of human beings is that they are rational animals. They use their minds to sustain their lives and well-being. The usage of the mind, however, is not set to follow some kind of automatic procedure, but rather every individual employs his mind in accordance with his own circumstances. This makes it impossible to capture human nature by means of mathematical formulae, as is done in the natural sciences. >In short, people have the freedom of choice to change their minds and pursue actions that are contrary to what was observed in the past. As a result of the unique nature of human beings, analyses in economics can only be qualitative. >Furthermore, to pursue quantitative analysis implies the possibility of the assignment of numbers, which can be subjected to all of the operations of arithmetic. To accomplish this, it is necessary to define an objective fixed unit. Such an objective unit, however, doesn’t exist in the realm of human valuations. On this Mises wrote, "There are, in the field of economics, no constant relations, and consequently no measurement is possible."

hwers 5y ago

This is probably true but it's quite an angry response to the linked article which is mostly just a joke.

chermi 5y ago

I suspect you may have a point hidden within here, a point that I might even agree with... But it's hard to understand that point and believe that you are discussing in good faith when you conflate things that you must know not to, given your implied knowledge. Econometrics (methodology) and neoclassical (school of thought) are on different "axes" if you will, if you were to try to decompose economics into into orthogonal components. I know that's a simplification Could you perhaps critique econometrics on its own? Edit 1 because I can't type Edit 2 to add this comment -- aww_dangs comment like 2 below here and 2 deeper is the closest to the critique this guy wanted to give

imtringued 5y ago

The problem with economics is that people make the assumption that money is primarily or even exclusively a medium of exchange. It's only since Keynes that everyone understood that it's not really true. However, if you were to tax cash with a 6% annual tax then the old classical period of economics would be quite relevant again.